Pacific Coast Horseshoeing School, Inc. v. Grafilo

Does California’s “ability to benefit” law, protecting students from being tricked into going into debt to pay for useless vocational training, violate the schools’ and prospective students’ First Amendment rights to academic freedom?

The Issue: Before admitting a student without a high school diploma or GED, private postsecondary vocational schools in California are required by law to show – by administering an approved test – that the student has the ability to benefit from the program. A trade school and a prospective student challenged California’s “ability to benefit” law on the ground it violates their rights to academic freedom under the free speech clause of the First Amendment.

Why It Matters: Congressional investigations, academic research, law enforcement agencies, and legal services providers have repeatedly found rampant deception and predatory enrollment practices by for-profit trade schools, leaving students trapped with debt in order to pay for training that they were falsely led to believe would help them find gainful employment. As a result, a high proportion of students enrolling in these schools emerge in worse financial distress than when they entered, often culminating in bankruptcy with a host of further adverse consequences. The ability to benefit rule is one of the primary protections for prospective victims against predatory enrollment practices.

More generally, there are no apparent limits to First Amendment doctrine propounded by the horseshoeing school. If the free speech clause can be used to strike down any regulation of a business whose operations involve speech (which is to say, almost any business), it will be virtually impossible to protect the public from a wide spectrum of harms, ranging from health and safety violations to fraud.

Public Good’s Contribution: Public Good filed a brief in the Ninth Circuit on behalf of non-profit organizations that provide legal services to and advocacy for low-income consumers and borrowers. The brief documented the extensive history of predatory and deceptive tactics used by for-profit post-secondary schools to enroll students under false pretenses, and the dire consequences to those students. The brief also confronted the First Amendment issues, arguing that the mere fact the business of the schools involves communication does not transform an ordinary regulation of unfair business practices into an instance of suppression of speech or ideas. The brief laid out the far-reaching consequences of adopting the plaintiff’s expansive view of the applicability of First Amendment protections against business regulation.

Amici represented by Public Good: The brief was filed in the Ninth Circuit on behalf of Housing and Economic Rights Advocates, Consumers Union, the Project on Predatory Student Lending of Harvard Law School, and the U.C. Berkeley Center for Consumer Law and Economic Justice.